Silicon Valley companies often talk a big game about transforming the culture of stodgy old industries, from media and retail to travel and finance. Until recently, though, the high-tech world hadn’t applied its disruptive energy to its own business practices. For decades, forging a deal with the Valley’s small, well-heeled clique of angel investors was a little like trying to break into an exclusive club. Entrepreneurs had to work their personal networks to get meetings with the right financiers and then negotiate privately, with little awareness of fair market value or better opportunities elsewhere. “It was a smoke-filled-room thing,” says Wesley Chan, a partner at Google Ventures, the search giant’s venture arm.
AngelList, a four-year-old startup based in San Francisco, is starting to open things up with a social network for the kind of people who create and invest in social networks. It’s a Kickstarter-like online forum where startup founders post their ideas and meet investors who fund risky, early-stage companies. In 2013, 500 startups raised $125 million through the site, including transactions ultimately closed offline, says Naval Ravikant, AngelList’s co-founder and chief executive officer. Ravikant, suddenly one of the Valley’s highest-profile power brokers, says his company’s mission is “to make startup investing transparent, efficient, and more open.”